Lisowski v. Walmart Stores, Inc.

• Decision Date: 04 August 2021
• Docket Number: 2:20-cv-1729-NR
• Citation: Lisowski v. Walmart Stores, Inc., 552 F.Supp.3d 519 (W.D. Pa. 2021)
• Parties: Christopher LISOWSKI, on behalf of himself and all others similarly situated, Plaintiff, v. WALMART STORES, INC., t/d/b/a Walmart, Defendant.
• Court: U.S. District Court — Western District of Pennsylvania

552 F.Supp.3d 519

Christopher LISOWSKI, on behalf of himself and all others similarly situated, Plaintiff,

v.WALMART STORES, INC., t/d/b/a Walmart, Defendant.

2:20-cv-1729-NR

United States District Court, W.D. Pennsylvania.

Signed August 4, 2021

Frank G. Salpietro, Rothman Gordon, P.C., Emily E. Town, Jackson Lewis P.C., Pittsburgh, PA, for Plaintiff.

Michael P. Pest, Thomas E. Sanchez, Eckert Seamans Cherin & Mellott, LLC, Pittsburgh, PA, Kathryn A. Robinette, Pro Hac Vice, Massey & Gail LLP, Washington, DC, Paul Berks, Suyash Agrawal, Pro Hac Vice, Massey & Gail LLP, Chicago, IL, for Defendant.

OPINION

J. Nicholas Ranjan, United States District Judge

Twice in the past two years, PlaintiffChristopher Lisowski went to Walmart to buy a six-pack of "5-Hour Energy" drinks.With each of these purchases, on top of the base price, Walmart charged Mr. Lisowski 94 cents in sales tax.Mr. Lisowski paid the tax, but later came to believe those charges were improper, because 5-Hour Energy is purportedly a "dietary supplement" not subject to sales tax in Pennsylvania.So he filed this class action, alleging that Walmart's incorrect assessment of sales tax violates the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), and also amounts to conversion, unjust enrichment, and breach of a constructive trust.Walmart now moves to dismiss Mr. Lisowski's claims on several grounds.

Applying the familiar standard of Rule 12(b)(6), the Court will grant Walmart's motion and will dismiss this case with prejudice.Simply put, Mr. Lisowski's complaint suffers from two insurmountable flaws which, in tandem, cause all his claims to fail as a matter of law.

First, a retailer's incorrect assessment of sales tax is not conduct covered by the UTPCPL, which only regulates activity that is part of "the conduct of any trade or commerce."73 P.S. § 201-3(a).When collecting sales tax, a retailer is not conducting "trade or commerce," even if such collection occurs in connection with a commercial transaction.Instead, because the Commonwealth requires retailers to collect sales tax on the Commonwealth's behalf, the retailer steps into the shoes of the Commonwealth and acts as a state agent, motivated by public duty rather than private gain.Thus, while it is true that the UTPCPL extends broadly, as to regulate all manner of deceptive activity in the conduct of trade or commerce, it does not extend to regulate activity disconnected from the retailer's commercial interests, such as tax collection.Mr. Lisowski's statutory claim fails for that reason.

Second, Mr. Lisowski's common-law claims are barred by the existence of an administrative procedure for consumers to obtain sales-tax refunds from the Pennsylvania Department of Revenue.Pennsylvania law requires claimants to strictly pursue that statutory remedy, to the exclusion of any common-law relief, so long as it is constitutionally adequate.Under the Erie doctrine, this is a substantive, rather than procedural, aspect of Pennsylvania law that applies in a federal court diversity action.What's more, the Pennsylvania Supreme Court has already held that the very same statutory refund procedures provide exclusive and adequate relief for any improper assessment of sales tax.SeeLilian v. Commonwealth , 467 Pa. 15, 354 A.2d 250, 252(1976).Because such relief is available to Mr. Lisowski, should he choose to pursue it, his common-law causes of action must also be dismissed.

For these reasons, discussed in full below, the Court will grant Walmart's motion, and dismiss Mr. Lisowski's complaint with prejudice.

BACKGROUND¹

Walmart is a multi-billion-dollar corporation that operates around 8,500 retail stores in 15 countries, including at least 131 Walmart and Sam's Club stores in Pennsylvania alone.ECF 1-2, ¶ 2.Among many other things, Walmart sells "5-Hour Energy" to customers in Pennsylvania and elsewhere.Id.at ¶ 3. 5-Hour Energy is an energy drink, marketed as a "dietary supplement," that provides caffeine comparable to a cup of coffee, delivered in the form of an easily consumed "shot."Id.at ¶¶ 3, 15.²Bottles of 5-Hour Energy are labeled as "DIETARY SUPPLEMENTS," and Walmart sells them in the medicine, drug, and medical-supply section of its stores.Id.at ¶ 15.

PlaintiffChristopher Lisowski lives in Pittsburgh, Pennsylvania.Id.at ¶ 1.On December 29, 2019, Mr. Lisowski entered a Walmart in Pittsburgh and bought a six-pack of 5-Hour Energy, among other things.Id.at ¶ 5.For that item, Walmart charged Mr. Lisowski the purchase price of $13.48, plus sales tax of $0.94.Id.at ¶¶ 6-7.The next year, Mr. Lisowski returned to the same Walmart and bought another six-pack of 5-Hour Energy.Id.at ¶ 8.Once again, Walmart charged him sales tax of $0.94 on top of the base purchase price.Id.at ¶ 9.

In Pennsylvania, retailers are required to collect sales tax, equal to 6-8% of the purchase price, on all sales of tangible, personal property.Id.at ¶ 10;see also72 P.S. § 7202.But there are exceptions.Both the statute and the related regulations promulgated by Pennsylvania's Department of Revenue exempt certain items from imposition of the tax.ECF 1-2, ¶ 11.Of relevance here, the Department of Revenue has publicly notified all retailers that "Dietary Supplements and Substitutes" are not subject to sales tax.Id.at ¶ 12.The Department also issued a "Retailer's Information" booklet that identifies "dietary supplements and substitutes, in any form" as exempt from sales tax in Pennsylvania.Id.at ¶ 13.³

Despite these directives regarding "dietary supplements," Walmart charged sales tax to Mr. Lisowski, and other similarly situated individuals, on purchases of 5-Hour Energy.Id.at ¶¶ 14, 17.This conduct forms the basis for all of Mr. Lisowski's statutory and common-law claims in the complaint.

LEGAL STANDARD

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)"tests the legal sufficiency of the complaint."Popa v. Harriet Carter Gifts, Inc. , 426 F. Supp. 3d 108, 113(W.D. Pa.2019)(Stickman, J.)(citation omitted).Such a motion "may be granted only if, accepting all well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the plaintiff, a court finds that [the]plaintiff's claims lack facial plausibility."Warren Gen. Hosp. v. Amgen Inc. , 643 F.3d 77, 84(3d Cir.2011)(citingBell Atl. Corp. v. Twombly , 550 U.S. 544, 555–56, 127 S.Ct. 1955, 167 L.Ed.2d 929(2007) ).

To evade dismissal, the plaintiff must allege "sufficient factual matter to show that the claim is facially plausible" and permit a "reasonable inference that the defendant is liable for the misconduct alleged."Fowler v. UPMC Shadyside , 578 F.3d 203, 210(3d Cir.2009)(cleaned up).Allegations that are "conclusory or bare-bones," such as "threadbare recitals of the elements of a cause of action," will not suffice.Id.(quotingAshcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868(2009) )(cleaned up).Even so, "detailed pleading is not generally required."Connelly v. Lane Const. Corp. , 809 F.3d 780, 786(3d Cir.2016).Rather, the complaint need only contain a "short and plain statement" showing "more than a sheer possibility that a defendant has acted unlawfully."Id.(cleaned up).

The defendant bears the burden of establishing that the plaintiff has failed to plead a plausible claim for relief.SeeKehr Packages, Inc. v. Fidelcor, Inc. , 926 F.2d 1406, 1409(3d Cir.1991).When evaluating a defendant's motion to dismiss, the Court can only consider the allegations of the plaintiff's complaint, the exhibits attached to it, and any documents integral to or explicitly relied on by the complaint.SeePopa , 426 F. Supp. 3d at 113(citations omitted).

DISCUSSION & ANALYSIS

Pennsylvania's Unfair Trade Practices and Consumer Protection Law arms consumers with a powerful weapon to wield against many kinds of unfair and deceptive practices.See generally73 P.S. § 201-2(4)(i)-(xxi);73 P.S. § 201-3.But like all statutory creations, the reach of that weapon is constrained by the statute's text.SeeNiz-Chavez v. Garland , ––– U.S. ––––, 141 S. Ct. 1474, 1486, 209 L.Ed.2d 433(2021)("[W]ords are how the law constrains power.").

Of relevance here, the UTPCPL limits its application to unfair or deceptive activity "in the conduct of any trade or commerce."73 P.S. § 201-3(a).In other words, the statute aims not at deception and unfairness generally, but at the particular evils of deception and unfairness in the commercial sphere—where greed, competition, and information asymmetry between buyers and sellers create unique opportunities for fraud and exploitation.SeeMeyer v. Cmty. Coll. of Beaver Cty. , 625 Pa. 563, 93 A.3d 806, 811(Pa.2014)("Prior to the enactment of the UTPCPL, common law contract and warranty theories largely presumed that a consumer and merchant stand at arms-length in reaching their bargain, failing to recognize that the average consumer relies in great part on a merchant's advanced knowledge concerning the goods and services at issue, and thus failed to protect against numerous unfair and deceptive business practices[.]"(citation omitted));see alsoLoduca v. WellPet LLC , No. 21-0954, 549 F.Supp.3d 391, 399, (E.D. Pa.July 13, 2021)("The Pennsylvania Supreme Court has stated that the underlying foundation and purpose behind Pennsylvania's Consumer Protection Law was the prevention of fraud and protection of the public from unfair or deceptive business practices and to even the bargaining power between consumers and sellers in commercial transactions."(citations omitted)).

That limitation poses a problem for Mr. Lisowski.As will be discussed, his UTPCPL claim fails because the conduct of which he complains here—incorrect charge of sales tax on the purchase of 5-Hour Energy—is not an act that Walmart engaged in as part of "the conduct of" its "trade or commerce."Nor can Mr. Lisowski prevail on his...